Exhibit 10.2


 


Final


CEO ONLY


 


ROCKWOOD HOLDINGS, INC.

PERFORMANCE RESTRICTED STOCK UNIT AWARD AGREEMENT


 


THIS AGREEMENT (the “Agreement”),
is made, effective as of December 11, 2009 (the “Grant Date”)
between Rockwood Holdings, Inc., a Delaware corporation (hereinafter
called the “Company”), and Seifollah Ghasemi, an
employee of the Company or an Affiliate, hereinafter referred to as the “Employee”. For purposes of this Agreement, capitalized terms
not otherwise defined above or below, or in the Plan, shall have the meanings
set forth in Appendix A attached to this Agreement and incorporated by
reference herein.


 


WHEREAS, the Company desires to grant the Employee
performance-based restricted stock unit awards as provided for hereunder (the “Restricted Stock Unit Awards”), ultimately payable in shares
of common stock of the Company, par value $0.01 per share (the “Common Stock”), pursuant to the 2009 Stock Incentive Plan
for Rockwood Holdings, Inc. and Subsidiaries (the “Plan”),
the terms of which are hereby incorporated by reference and made a part of this
Agreement; and


 


WHEREAS, the committee of the Company’s Board
appointed to administer the Plan (the “Committee”) has
determined that it would be to the advantage and best interest of the Company
and its shareholders to grant the shares of Common Stock provided for herein to
the Employee as an incentive for increased efforts during his term of office
with the Company or an Affiliate, and has advised the Company thereof and
instructed the undersigned officers to grant said Restricted Stock Unit Awards.


 


NOW, THEREFORE, in consideration of the mutual
covenants herein contained and other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto do hereby agree as follows:


 


1.                                       Grant of the
Restricted Stock Units. Subject to the terms and conditions of the
Plan and the additional terms and conditions set forth in this Agreement, the
Company hereby grants to the Employee the opportunity to vest in the Restricted
Stock Unit Awards, which shall vest in accordance with Section 2 herein
(the “Performance-Based RSUs”) up to [insert 200% of Target Performance-Based RSUs]
Performance-Based RSUs (the “Maximum Performance-Based
RSUs”), of which [insert target
number of Performance-Based RSUs] Performance-Based RSUs represent
the Employee’s “Target Performance-Based RSUs.”
An “RSU” represents the right to receive one
share of Common Stock.


 


2.                                       Vesting.


 


(a)                                  Performance-Based
RSUs.  The vesting of the
Performance-Based RSUs shall be subject to the satisfaction of the conditions
set forth in both subsection (i)(A), (B), (C) or (D), as
applicable, and subsection (ii) of this Section 2(a):


 

















 


(i)                                     Service Vesting
Requirement.


 


(A)                              Unless
otherwise provided in this Agreement, so long as the Employee continues to be
employed by the Company or its Subsidiaries through December 31, 2012 (the
“Vesting Date”), the Employee shall, on
the Vesting Date, become vested in a number of Performance-Based RSUs (not to
exceed the number of Maximum Performance-Based RSUs set forth in Section 1
above) determined based on the formulas set forth in Section 2(a)(ii) below.


 


(B)                                If, prior to
the Vesting Date (and absent the occurrence of any Change of Control), the
Employee’s employment with Company and its Subsidiaries is terminated (x) for
any reason by the Employee (other than due to the Employee’s death, Disability
or Retirement) or (y) by the Company and its Subsidiaries for Cause, then
the Performance-Based RSUs shall be forfeited by the Employee without
consideration as of such termination date and this Agreement shall terminate
without payment in respect thereof.


 


(C)                                If, prior to
the Vesting Date (and absent the
occurrence of any Change of Control), the Employee’s employment with the
Company and its Subsidiaries is terminated (x) by the Company and its
Subsidiaries other than for Cause or (y) by the Employee due to the
Employee’s death or Disability, then this Agreement shall remain outstanding
and, as of the Vesting Date, the Employee shall become entitled to receive a
distribution of a number of shares of Common Stock equal to the product of (i) the
number of Performance-Based RSUs in which the Employee would have become vested
pursuant to Section 2(a)(ii) below, if the Employee had remained
employed with the Company or a Subsidiary through the Vesting Date, and (ii) a
fraction, the numerator of which is equal to the number of days between (and
including) the Grant Date and the date such employment so terminates, and the
denominator of which is equal to 1097 (such shares, the “Prorated
Performance-Based Shares”).


 


(D) (1)              If, during the Performance
Period (and absent the occurrence of any Change of Control), the Employee’s
employment with the Company and its Subsidiaries is terminated by the Employee
due to the Employee’s Retirement, then this Agreement shall remain outstanding
and, as of the Vesting Date, the Employee shall become entitled to receive a
distribution of Prorated Performance-Based Shares (determined based on the
formula set forth in Section 2(b)(i)(C) above).


 


(2)                                  If, after the
completion of the Performance Period, but prior to the Vesting Date (and absent
the occurrence of any Change of Control), the Employee’s employment with the
Company and its Subsidiaries is terminated by the Employee due to the Employee’s
Retirement, then this Agreement shall remain outstanding and, as of the Vesting
Date, the Employee shall become entitled to receive a distribution of a number
of shares of Common Stock equal to the number of Performance-Based RSUs in
which the Employee would have become vested pursuant to Section 2(b)(ii) below,
if the Employee had remained employed with the Company or a Subsidiary through
the Vesting Date.


 


2

















 


(ii)                                  Performance
Vesting Requirement.


 


(A)                              The
Performance-Based RSUs shall, so long as the Employee remains employed with the
Company or its Subsidiaries through the Vesting Date (or the provisions of Section 2(a)(i)(C) otherwise
apply), vest on the Vesting Date as follows: up to 100% of the Maximum
Performance-Based RSUs awarded hereunder shall become vested if and to the
extent that, during the Performance Period, (x) the 2010 Actual Adjusted
EBITDA, as compared to the 2010 Budgeted Adjusted EBITDA, and (y) the 2010
Actual Adjusted EPS, as compared to the 2010 Budgeted Adjusted EPS, is
achieved, in each case by certain specified percentages, relative to a targeted
2010 Budgeted Adjusted EBITDA amount (the “2010 EBITDA Target”)
and a 2010 Budgeted Adjusted EPS amount (the “2010 EPS
Target”), respectively, all as set forth on Schedule I attached
hereto and incorporated by reference herein.


 


(B)                                Whether and to
what extent the Performance-Based RSUs have become vested shall be determined
by the Committee at its first meeting after the Financial Statement Approval
Date following the end of the Performance Period (the “Determination
Date”), upon the Committee’s certification of achievement of the
applicable performance goals set forth in Section 2(a)(ii)(A) above.


 


(C)                                Notwithstanding
anything set forth in this Section 2(b) to the contrary, if the Board
does not establish, within the first 120 days of calendar year 2010, any or
either of the 2010 EBITDA Target or the 2010 EPS Target, the Performance-Based
RSUs shall, so long as the Employee remains employed with the Company or its
Subsidiaries through the Vesting Date (or an event described in Section 2(a)(i)(C) occurs),
become 100% vested as to the number of Target Performance-Based RSUs awarded
hereunder, and all other Performance-Based RSUs granted hereunder shall be
forfeited without consideration.


 


(iii)                               Settlement of
Performance-Based RSUs. Promptly after the Vesting Date (but in no
event later than 75 days after the end of the calendar year in which the
Vesting Date occurs (i.e., by no later than March 15, 2013)), the Company
shall distribute to the Employee a number of shares of Common Stock equal to
the number of Performance-Based RSUs that become vested in accordance with Section 2(a) hereof.
Any number of Performance-Based RSUs that do not become vested in accordance
with Section 2(a) hereof (to the extent not already previously
forfeited pursuant to Section 2(a)(i)(B) above) shall, effective as
of the Vesting Date, be forfeited by the Employee without consideration and
this Agreement shall terminate without payment in respect thereof.


 


(b)                                 Effect of
Change of Control. Notwithstanding anything set forth in Section 2(a) or
(b) above, if there occurs a Change of Control, the following rules shall
apply with respect to the RSUs granted hereunder:


 


(i)                                     If a Change of
Control occurs, and the Employee is still employed with the Company or its
Subsidiaries upon the occurrence of such Change of Control, if


 


(A)                              such Change of
Control occurs prior to the Determination Date, only the number of Target
Performance-Based RSUs granted hereunder shall immediately vest (and all other
Performance-Based RSUs shall be forfeited by the Employee without 


 


3

















 


consideration), and shall
become converted into the right to receive a cash payment equal to the product
of (x) the total number of such Performance-Based RSUs and (y) the
price per share paid for one share of Common Stock in the Change of Control
transaction (such price, the “CIC Price”)
(and all other Performance-Based RSUs granted hereunder shall be forfeited upon
such event), but if


 


(B)                                such Change of
Control occurs after the Determination Date but before the date the
Performance-Based RSUs are settled under Section 2(a)(iii) above,
only the number of Performance-Based RSUs granted hereunder that become vested
under Section 2(a)(ii) above shall become converted into the right to
receive a cash payment equal to the product of (x) the total number of
such Performance-Based RSUs and (y) the CIC Price (and all other Performance-Based
RSUs granted hereunder shall be forfeited upon such event);


 


and in either event
described in clause (A) or (B) above occurs, such cash payment shall
be made as soon as administratively practicable following the Vesting Date (but
in no event later than December 31, 2013);


 


(ii)                                  Notwithstanding
Section 2(b)(i) above, if, following the occurrence of a Change of
Control but prior to the Vesting Date, (A) the Employee’s employment is
terminated by the Company and its Subsidiaries without Cause or by the Employee
for Good Reason, the timing of the payment of the amount otherwise due and
payable under Section 2(b)(i)(A) or (B), as applicable, shall be
accelerated and shall be paid to the Employee as soon as practicable following
such termination of employment; or (B) the Employee’s employment with the
Company and its Subsidiaries is terminated by the Company and its Subsidiaries
for Cause or by the Employee for any reason (other than due to the Employee’s
death, Disability, Retirement or by the Employee for Good Reason), then the
Performance-Based RSUs and the right to receive any cash as set forth in Section 2(b)(i)(A) or
(B), as applicable, shall be forfeited by the Employee without consideration
and this Agreement shall terminate without payment in respect thereof; but if


 


(iii)                               the Employee
has ceased to be employed with the Company or its Subsidiaries prior to such
Change of Control under circumstances set forth in Section 2(a)(i)(C) above,
then the Employee shall, in lieu of the number of Prorated Performance-Based
Shares otherwise distributable pursuant to Section 2(a)(i)(C), instead be
entitled to receive a cash payment, equal to the product of (x) the total
number of such Prorated Performance-Based Shares and (y) the CIC Price.
This cash payment shall be made as soon as practicable following the Change of
Control (but in no event later than 90 days following such event).


 


3.                                       Dividend
Equivalents. With respect to each cash dividend or distribution
(if any) paid with respect to Common Stock to holders of record on and after
the Grant Date, a number of shares of Common Stock shall be accrued on the
books and records of the Company, in an amount equal to the product of (i) the
amount of such dividend or distribution paid with respect to one share of Common
Stock, multiplied by (ii) the number of vested RSUs (if any) granted
hereunder then held by the Employee. At such time(s) thereafter as the
Employee receives a distribution of shares of Common Stock in respect of his or
her vested RSUs granted hereunder pursuant to the applicable provision of Section 2
above, the Company shall also distribute to the Employee such number of shares
of Common Stock accrued under this Section 3 


 


4

















 


that relate to the vested RSUs in respect of
which such distribution of shares is otherwise being made. In the event of any
stock dividend, the provisions of Section 8 of the Plan shall apply to
this Restricted Stock Unit Award.


 


4.                                       Limitation on
Obligations. The Company’s obligation with respect to the RSUs
granted hereunder is limited solely to the delivery to the Employee of shares
of Common Stock on the date when such shares are due to be delivered hereunder,
and in no way shall the Company become obligated to pay cash in respect of such
obligation, unless as otherwise provided for herein. This Restricted Stock Unit
Award shall not be secured by any specific assets of the Company or any of its
Subsidiaries, nor shall any assets of the Company or any of its subsidiaries be
designated as attributable or allocated to the satisfaction of the Company’s
obligations under this Agreement.


 


5.                                       Rights as a
Stockholder. The Employee shall not have any rights of a common
stockholder of the Company unless and until the Employee becomes entitled to
receive the shares of Common Stock pursuant to Section 2 above. As soon as
practicable following the date that the Employee becomes entitled to receive
the shares of Common Stock pursuant to Section 2, certificates for the
Common Stock shall be delivered to the Employee or to the Employee’s legal
guardian or representative.


 


6.                                       Transferability. The RSUs
shall not be subject to alienation, garnishment, execution or levy of any kind,
and any attempt to cause any such awards to be so subjected shall not be
recognized. The shares of Common Stock acquired by the Employee pursuant to Section 2
of this Agreement may not at any time be transferred, sold, assigned, pledged,
hypothecated or otherwise disposed of unless such transfer, sale, assignment,
pledge, hypothecation or other disposition complies with applicable securities
laws.


 


7.                                       Purchaser’s
Employment by the Company. Nothing contained in this Agreement
obligates the Company or any Subsidiary to employ the Employee in any capacity
whatsoever or prohibits or restricts the Company (or any Subsidiary) from
terminating the employment, if any, of the Employee at any time or for any
reason whatsoever, with or without Cause, and the Employee hereby acknowledges
and agrees that neither the Company nor any other Person has made any
representations or promises whatsoever to the Employee concerning the Employee’s
employment or continued employment by the Company or any Affiliate thereof.


 


8.                                       Change in
Capitalization. In the event of any change in the outstanding Common
Stock by reason of a stock split, spin-off, stock dividend, stock combination
or reclassification, recapitalization or merger, change of control, or similar
event, the provisions of Section 8 of the Plan shall govern the treatment
of this Restricted Stock Unit Award.


 


9.                                       Withholding. It shall be a
condition of the obligation of the Company upon delivery of Common Stock to the
Employee pursuant to Section 2 above that the Employee pay to the Company
such amount as may be requested by the Company for the purpose of satisfying
any liability for any federal, state or local income or other taxes required by
law to be withheld with respect to such Common Stock. The Company shall be
authorized to take such action as may be necessary, in the opinion of the Company’s
counsel (including, without limitation, withholding Common Stock otherwise
deliverable to the Employee hereunder and/or 


 


5

















 


withholding amounts from any compensation or
other amount owing from the Company to the Employee), to satisfy the
obligations for payment of the minimum amount of any such taxes. In addition,
if the Company’s accountants determine that there would be no adverse
accounting implications to the Company, the Employee may be permitted to elect
to use Common Stock otherwise deliverable to the Employee hereunder to satisfy
any such obligations, subject to such procedures as the Company’s accountants
may require. The Employee is hereby advised to seek his own tax counsel
regarding the taxation of the grant of RSUs made hereunder.


 


10.                                 Securities Laws. Upon the
delivery of any Common Stock to the Employee, the Company may require the
Employee to make or enter into such written representations, warranties and
agreements as the Committee may reasonably request in order to comply with
applicable securities laws or with this Agreement. The delivery of the Common
Stock hereunder shall be subject to all applicable laws, rules and
regulations and to such approvals of any governmental agencies as may be
required.


 


11.                                 Section 409A
of the Code. In the event that it is reasonably determined by
the Company that, as a result of the deferred compensation tax rules under
Section 409A of the Code (and any related regulations or other
pronouncements thereunder) (“the Deferred Compensation
Tax Rules”), benefits that the Employee is entitled to under the
terms of this Agreement may not be made at the time contemplated by the terms
hereof or thereof, as the case may be, without causing Employee to be subject
to tax under the Deferred Compensation Tax Rules, the Company shall, in lieu of
providing such benefit when otherwise due under this Agreement, instead provide
such benefit on the first day on which such provision would not result in the
Employee incurring any tax liability under the Deferred Compensation Tax Rules;
which day, if the Employee is a “specified employee” (within the meaning of the
Deferred Compensation Tax Rules), may, in the event the benefit to be provided
is due to the Employee’s “separation from service” (within the meaning of the
Deferred Compensation Tax Rules) with the Company and its Subsidiaries, shall
be the first day following the six-month period beginning on the date of such
separation from service.


 


12.                                 Notices. Any notice to
be given under the terms of this Agreement to the Company shall be addressed to
the Company in care of its Secretary, and any notice to be given to the
Employee shall be addressed to him at the address given beneath his signature
hereto. By a notice given pursuant to this Section 12, either party may
hereafter designate a different address for notices to be given to him. Any
notice which is required to be given to the Employee shall, if the Employee is
then deceased, be given to the Employee’s personal representative if such
representative has previously informed the Company of his status and address by
written notice under this Section 12. Any notice shall have been deemed
duly given when enclosed in a properly sealed envelope or wrapper addressed as
aforesaid, deposited (with postage prepaid) in a post office or branch post
office regularly maintained by the United States Postal Service.


 


13.                                 Governing Law. The laws of
the State of Delaware (or if the Company reincorporates in another state, the
laws of that state) shall govern the interpretation, validity and performance
of the terms of this Agreement regardless of the law that might be applied
under principles of conflicts of laws.


 


6

















 


14.                                 Signature in
Counterparts. This Agreement may be signed in counterparts, each
of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.


 


15.                                 Restricted
Stock Unit Award Subject to Plan. The Restricted Stock Unit
Award shall be subject to all applicable terms and provisions of the Plan, to
the extent applicable to the Common Stock. In the event of any conflict between
this Agreement and the Plan, the terms of the Plan shall control.


 


[Signatures on next page.]


 


7

















 


IN WITNESS WHEREOF, the parties hereto have executed
this Agreement effective as of the date hereof.


 


	
   

  	
  ROCKWOOD
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SEIFOLLAH GHASEMI

  



 


8

















 


Schedule I


 


70%
of the Target Performance-Based RSUs (the “EBITDA RSUs”)
shall vest subject to the achievement of the 2010 EBITDA Target, as follows:


 


	
  2010 Actual Adjusted EBITDA 

  Performance as Compared to 2010 

  Budgeted Adjusted EBITDA (70% of Target 

  Performance-Based Units)

  	
   

  	
  % of
  EBITDA RSUs Vested*

  	
   

  
	
  Less than 80%

  	
   

  	
  0%

  	
   

  
	
  80%

  	
   

  	
  25%

  	
   

  
	
  100%

  	
   

  	
  100%

  	
   

  
	
  Greater than 120%

  	
   

  	
  200%

  	
   

  



 


30%
of the Target Performance-Based RSUs (the “EPS RSUs”)
shall vest subject to the achievement of the 2010 EPS Target, as follows:


 


	
  2010 Actual Adjusted EPS
  Performance as 

  Compared to 2010 Budgeted Adjusted EPS 

  (30% of Target Performance-Based Units)

  	
   

  	
  % of EPS
  RSUs Vested*

  	
   

  
	
  Less than 80%

  	
   

  	
  0%

  	
   

  
	
  80%

  	
   

  	
  25%

  	
   

  
	
  100%

  	
   

  	
  100%

  	
   

  
	
  Greater than 120%

  	
   

  	
  200%

  	
   

  



 


With
respect to both the EBITDA RSUs and the EPS RSUs, the number of EBITDA RSUs and
EPS RSUs that shall become vested hereunder shall be interpolated for any
achievement of the 2010 EBITDA Target and 2010 EPS Target, respectively, which
falls between the above amounts as applicable.


 


The Company shall
communicate to the Employee the 2010 EBITDA Target and the 2010 EPS Target as
soon as administratively practicable following the date the Board and/or the
Committee establishes such targets.


 

















 


Appendix
A

Definitions


 


“2010 Actual Adjusted EBITDA” shall mean the
Adjusted EBITDA, except that, for the purposes of this Agreement, any component
of EBITDA that is translated in currencies other than United States dollars
shall be converted into United States dollars using budgeted exchange rates.


 


“2010 Actual Adjusted EPS” shall mean the earnings
per share of the Company, on a fully diluted basis, as reported in the Company’s
Form 10-K filed with the Securities Exchange Commission in respect of the
2010 fiscal year of the Company, adjusted for non-recurring and unusual items
and budgeted exchange rates for currencies other than the United States dollar
to be converted into the United States dollar.


 


“2010 Budgeted Adjusted EBITDA” shall mean the
budgeted Adjusted EBITDA in respect of the 2010 fiscal year of the Company at
budgeted exchange rates, as determined and approved by the Board and/or the
Committee, which is anticipated to be so determined and approved by no later
than April 30, 2010.


 


“2010 Budgeted Adjusted EPS” shall mean the budgeted
earnings per share of the Company, on a fully diluted basis, in respect of the
2010 fiscal year of the Company, with budgeted exchange rates for currencies
other than the United States dollar to be converted into the United States
dollar, as determined and approved by the Board and/or the Committee, which is
anticipated to be so determined and approved by no later than April 30,
2011.


 


“Adjusted EBITDA” shall mean EBITDA adjusted for all
items, as applicable, set forth in the definition of “Consolidated EBITDA” in
the Credit Agreement dated as of July 30, 2004 among Rockwood Specialties
Group, Inc., Rockwood Specialties Limited, Rockwood Specialties
International, Inc., the lenders party thereto, Credit Suisse First
Boston, acting through its Cayman Islands Branch, as administrative agent and
collateral agent, and UBS Securities LLC and Goldman Sachs Credit Partners
L.P., as co-syndication agents thereunder, filed as Exhibit 10.1 to
Rockwood Specialties Group, Inc.’s Report on Form 8-K filed with the
Securities and Exchange Commission on August 4, 2004 (“Credit Agreement”)
and reported in the Company’s Form 10-K filed with the Securities Exchange
Commission in respect of the 2010 fiscal year of the Company.


 


“Cause” shall mean (i) the Employee’s willful
and continued failure to perform duties, which are within the control of the
Employee and consistent with such Employee’s title and position, that is not
cured within 15 days following written notice of such failure, (ii) the
Employee’s conviction of or plea of guilty or no contest to a (x) felony
or (y) crime involving moral turpitude, (iii) the Employee’s willful
malfeasance or misconduct which is injurious to the Company or its
Subsidiaries, other than in a manner that is insignificant or inconsequential, (iv) a
breach by Employee of the material terms of any non-compete, non-solicitation
or confidentiality covenants or agreements by which the Employee may be bound,
following notice of such breach (which notice may be oral or written) or (v) any
violation by the Employee of any material written Company policy after written
notice of such breach, if such violation is shown by the


 

















 


Company to be reasonably
expected to result in material injury to the business, reputation or financial
condition of the Company.


 


“Change in Control” shall mean the earliest to occur
of the following:


 


(i)                                     any Person (which term shall
mean any individual, corporation, partnership, group, association or other “person,”
as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended, other than the Company or any employee
benefit plans sponsored by the Company) is or becomes the “beneficial owner”
(as defined in Rule 13d-3 under such Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power
of the Company’s outstanding Voting Securities (which term shall mean
securities which under ordinary circumstances are entitled to vote for the
election of directors) other than through the purchase of Voting Securities
directly from the Company through a private placement;


 


(ii)                                  individuals who constitute
the Board on the date hereof (the “Incumbent Board”) cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the directors comprising the Incumbent Board shall from and after
such election be deemed to be a member of the Incumbent Board;


 


(iii)                               a merger or consolidation
involving the Company or its stock or an acquisition by the Company, directly
or indirectly or through one or more subsidiaries, of another entity or its
stock or assets in exchange for the stock of the Company is consummated,
unless, immediately following such transaction, 50.1% or more of the then
outstanding Voting Securities of the surviving or resulting corporation or
entity will be (or is) then beneficially owned, directly or indirectly, by the
individuals and entities who were the beneficial owners of the Company’s
outstanding Voting Securities immediately prior to such transaction (treating,
for purposes of determining whether the 50.1% continuity test is met, any
ownership of the Voting Securities of the surviving or resulting corporation or
entity that results from a stockholder’s ownership of the stock of, or other
ownership interest in, the corporation or other entity with which the Company
is merged or consolidated as not owned by persons who were beneficial owners of
the Company’s outstanding Voting Securities immediately prior to the
transaction); or


 


(iv)                              all or substantially all of
the assets of the Company are sold or transferred to a Person as to which (A) the
Incumbent Board does not have authority (whether by law or contract) to
directly control the use or further disposition of such assets and (B) the
financial results of the Company and such Person are not consolidated for
financial reporting purposes.


 


Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur unless such transaction or occurrence constitutes
a change in ownership or effective control within the meaning of Section 409A(a)(2)(A)(v) of
the Code.


 


“Disability” shall mean a determination, made at the
request of the Employee or upon the reasonable request of the Company set forth
in a notice to the Employee, by a physician selected by the Company and the
Employee, that the Employee is unable to perform his duties as 


 


11

















 


an employee of the Company
or its subsidiaries and in all reasonable medical likelihood such inability
will continue for a period in excess of 180 consecutive days.


 


““Financial Statement Approval Date” shall mean the
date on which the audited financial statements of the Company for the 2010
fiscal year of the Company have been finally approved by the auditing firm
engaged by the Company to review such statements (which approval shall in no
event occur later than March 31, 2011).


 


“Good Reason” shall mean without the Employee’s
consent, (i) a reduction in the Employee’s base salary or annual bonus
opportunity (other than a reduction in base salary that is offset by an
increase in bonus opportunity upon the attainment of reasonable financial
targets, which reduction may not exceed 10% of the Employee’s base salary in
any 12 month period), (ii) a substantial reduction in the Employee’s
duties and responsibilities, which continues beyond 15 days after written
notice by the Employee to the Company of such reduction, (iii) the
elimination or reduction of the Employee’s eligibility to participate in the
Company’s benefit programs that is inconsistent with the eligibility of
similarly situated employees of the Company to participate therein, (iv) a
transfer of the Employee’s primary workplace by more than 35 miles from the
current workplace, (v) any serious chronic mental or physical illness of
an immediate family member that requires the Employee to terminate his or her
employment with Company because of a substantial interference with his or her
duties at the Company or (vi) any failure by the Company to pay when due
any payment owed to the Employee within 15 days after the date such payment
becomes due.


 


“Performance Period” shall mean fiscal year 2010 of
the Company.


 


“Retirement” shall mean retirement at age 62 or over
(or such other age as may be approved by the Board of Directors) after having
been employed by the Company or a Subsidiary for at least ten years.


 


12